1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Charra [1.4K]
3 years ago
7

Sky invests $90,000 today and receives a future value 8 years from now of $120,000. Interest is compounded twice per year. Her s

tated annual interest rate is _____ for this twice-a-year compounded investment.
Business
1 answer:
kirill115 [55]3 years ago
3 0

Answer:

Annual interest rate= 3.63%

Explanation:

<em>The rate of return earned on the investment can be worked out using the Future value of a lump sum formula. </em>

<em>The future value of a lump sum is the amount lump would amount to if interest is earned and compounded at a certain interest rate. </em>

The formula is

FV = PV × (1+r)^(n)  

PV = Present Value- 90,000

FV - Future Value, - 120,000

n- number of period- 8× 2 = 16 (note interest is compounded twice a year)

r- interest rate per period - ?

120,000 = 90,000× (1+r)^16

1+r)^16= 120.000/90,000= 1.333

(1+r)^16= 1.333

1+r= 1.333^(1/16)

r =1.333^(1/16) -1  = 0.01812

r =0.01812× 100= 1.812%

Bi-annual interest rate = 1.812%

Annual interest rate = Bi-annual rate × 2

Annual interest rate = 1.812% × 2 =3.63%

Annual interest rate= 3.63%

You might be interested in
A sudden stop will be easier to navigate if the country borrows internationally in foreign currencies and lend locally in its do
natulia [17]

Answer: False

Explanation:

A sudden stop refers to the sudden decline in net capital inflows in the economy from outside. This is a significant method by which the economy can have access to foreign exchange.

If the country therefore borrows internationally in foreign currencies whilst lending in domestic currency, the sudden stop will be difficult to navigate because it will impair the country's ability to pay off the international creditors it has because it will not have enough of the required foreign currency to pay them.

8 0
2 years ago
Phillips Equipment has 80,000 bonds outstanding that are selling at par. Bonds with similar characteristics are yielding 7.5%. T
ollegr [7]

Answer:

A) 10.15%

Explanation:

Cost of equity (Re) = 14.06% or 0.1406

cost of preferred stock (Rp) = 7/65 = 0.10769

cost of bonds (Rb) = 7.5% or 0.075

 outstanding shares = 2.5 million shares x $42 = $105 million

bonds outstanding = $1,000 x 80,000 bonds = $80 million

preferred stock = $65 x 750,000 = $48.75 million

corporate tax rate = 38% or 0.38

total market value of equity + debt (in millions) = $105 + $48.75 + $80 = $233.75

WACC = [(outstanding shares / total market value) x Re] + [(preferred stock / total market value) x Rp] + {[(bonds outstanding / total market value) x Rb] x (1 - tax rate)}

WACC = [($105m / $233.75m) x 0.1406] + [($48.75m / $233.75m) x 0.10769] + {[($80m / $233.75m) x 0.075] x (1 - 0.38)}

WACC = 0.06316 + 0.02246 + 0.01591 = 0.10153 or 10.15%

6 0
3 years ago
A cosmetics company is conducting a second-year review of one of its newest products. The marketing department expects that the
-BARSIC- [3]

Answer:

sensitivity analysis

Explanation:

According to my research on different business strategies, I can say that based on the information provided within the question the senior management is undertaking sensitivity analysis. This is a study of what kind of relationship exists between the inputs and outputs of a system and how much uncertainty exists between them. This is what the senior management is undertaking when determining different factors which might lead to different profit projections.

I hope this answered your question. If you have any more questions feel free to ask away at Brainly.

6 0
3 years ago
g An increase in demand is represented by a a. movement downward and to the right along a demand curve. b. movement upward and t
Lana71 [14]

Answer: c. rightward shift of a demand curve.

Explanation:

When there is movement along the demand curve, this is due to a change in the price of the good.

However, an increase in demand is noted by a rightward shift in the Demand curve. This is to signify that the demand has changed even though the price had remained the same. This shift is meant to signify that something else apart from price has caused an increase in demand such as an increase in income. After the shift, the price will have to change to reflect a new Equilibrium which will be the new intersection point with the Supply Curve.

I have attached a graph showing what happens when Quantity Demand increases.

4 0
3 years ago
5 points
swat32

Answer:

R

Explanation:

7 0
2 years ago
Other questions:
  • Bric Autos Inc., a Campora-based automobile company, made a capital investment of $300,000 to set up production units and distri
    7·1 answer
  • Buckeye Corporation adopted dollar-value LIFO on January 1, 2021, when the inventory value was $514,000 and the cost index was 1
    10·1 answer
  • What typically happens to non farm payrolls the pmi indicator, and housing starts at the onset of a recession in the united stat
    14·2 answers
  • Assume that you have been hired as a consultant by CGT, a major producer of chemicals and plastics, including plastic grocery ba
    8·1 answer
  • The daily demand of an item is 1600 units. The average processing time is 30 seconds per unit. Containers (carrying 240 items) o
    14·1 answer
  • Sticky Company’s merchandise inventory balance at year end is $15,050, but a physical count reveals that only $15,000 of invento
    9·1 answer
  • The table below represents how Marco feels about chocolate candy bars.
    7·1 answer
  • King corporation owns machinery with a book value of $760,000. It is estimated that the machinery will generate future cash flow
    14·1 answer
  • Lori wants to give her daughter $25,000 in 8 years to start her own business. How much should Lori invest today, at an annual in
    6·1 answer
  • Apple's products are well known and valued because the demand, customer loyalty, and company's price premium rank high in the co
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!